UNIT 3

Applying IT for Competitive

Advantage

IT FOR MANAGERS
Contents

Introduction : Why the firms seek competitive
advantages

Functional, Enterprise and Inter- organizational
system

Electronic Commerce
Why Firms Seek Competitive Advantage (Porter’s
Five-Force Model):
The competitive forces Model is used to
describe the interaction of

external influences,

specifically threats and

opportunities, that
affect an organization’s

strategy and

ability to compete.
Porter’s Model focuses upon

• Rivalry among existing competitors

• Threat of new entrants
• Threat of substitute product and services
• Bargaining power of buyers
• Bargaining power of suppliers
Information Systems for Competitive
Advantage

Businesses continually seek to establish
competitive advantage in the marketplace.

There are eight principles:

The first three principles concern products.

The second three principles concern the
creation of barriers.

The last two principles concern establishing
alliances and reducing costs.
Globalization
Certain features:
1. Businesses are expanding into global markets for their
products and services
2. Using global production facilities to manufacture and
assemble products
3. Raising money in global capital markets
4. Forming alliances with global partners
5. Battling with global competitors for customers from all
over the globe.
 Drivers of Competitive Competitive Implementation
change Environment Response

Globalization
Global
Efficient The Network
Business
Global Global
Operations and
Markets Corporation
Alliances

Technology

How Information Technology can support the globalization of business

Increased Management Complexities
 Management Science Technologies
 Decision-making

The Functional Uses of MIS

Enhance :
 Quality of our operations
 Quality of our services
Through which We achieve :
 Efficiency
 Transparency
 Speedy Decision making
 Business Process

What tasks does each employee perform, in
what order, and on what schedule?

How are raw materials transformed into
products?

How are inventory managed?

How are orders fulfilled?

How are bills paid?

How are products marketed?

How are employees hired?
And so many other Hows?
 Business Process Re-engineering
(BPR)
When IT substitutes for human effort, it automates a
task or process.

When IT augments human effort, it informats a task or

process.

When IT restructures, it transforms a set of tasks or

processes.
Business Process Reengineering :

Business Process Re-engineering (BPR) is

an example of how information Technology
is being used to restructure work by
transforming business processes.
or
“The fundamental rethinking and radical
redesign of business processes to achieve
dramatic improvements, such as cost,
quality, service and speed.”
The Business Process Re-
Re-engineering
could be defined as:

“Re-
Re-questioning and
Re-
Re-answering the
way we do business”
 BPR by IT at various levels:
IT Initiative Process Business
Changed Benefit

Individual Laptop System Sales Call Increased Sale

Work Group Product Product Greater

database Distribution Customer
Satisfaction
Business Product Channel Improved
unit Management Communication Competitive
System Position
 Competitive Advantage
Competitive Strategies:
Competitive Forces:
1. Cost Strategies 1. Supplier

2. Differentiation Strategies 2. Customer

3. Innovation Strategies 3. Competitor
4. Growth Strategies 4. New Entrant
5. Alliance Strategies 5. Substitute
Strategy Strategic Business Benefits
Information System
Cost Leadership
CentralizedBuying
Cut purchasing cost
(cutting cost)
Medical Care Monitoring
Cut Medical Costs

Machine Tool Control
Cut Manufacturing Costs

Differentiation
Portable Computer-based
Increase in market share

(Increase in Market Share) customer need analysis

Computer-aided job
Increase in market share
estimation
Increase in market share

Customer Online Shipment
Tracking

Innovation
Customer Cash
Market Leadership

(Market Leadership) Management Accounts

Online Package Tracking
Market Leadership
and Flight Mgmt

Customer order entry

Market Leadership
 IS for Competitive Advantage

Provides support to managers as they
work to achieve corporate goals

Enables managers to compare results to
established company goals and identify
problem areas and opportunities for
improvement

Precise development of strategies
Contd.

Planning, forecasting and monitoring

Problem solving

Decision-making

Separate work from location